Ring in the New Year with financial resolutions

By NORTHWEST HERALD

Turning over a new leaf is easier said than done, and trying to do too much at one time can be a set up for failure. However, with proper planning and execution, important small changes can eventually add up to big results.

"Start by clarifying your short and long term goals," said Mike Miroballi, president, BMO Harris Financial Advisors. "Do you want to buy a house, send your children to college or be comfortable in retirement?"a "Once you know what your goals are, the next step is to develop and implement a plan to help you reach them."

Here are five things Miroballi suggests to get you started if 2013 is the year you plan to get your finances in order.

1. Review. Begin the New Year by reviewing your current financial situation. This allows you to build on your successes and learn from your mistakes. Look at your budget to make sure you are spending within your means.

You should also review payroll deductions to ensure you are maximizing tax benefits and employer matching in the case of defined contribution plans, such as 401(k). There have been changes to allowable deductible contributions to programs such as Health Care Spending Accounts that you should be aware of. Anyone over 50 should be aware that
they can use catch-up contributions that allow them to put in more money to their 401ks ($5,000 additional) and IRAs ($1,000 additional).

2. Increase your financial literacy. It's important to have a basic understanding of finances so you can make wise choices. Miroballi said there's a lot of information available that will help you gain knowledge on personal finances. "But also find an adviser you trust who
can help educate you about the best options for saving and investing and assist you in creating a realistic plan for your financial future that will give you direction to stay on track to meet your goals."

3. Simplify your finances. Put bill paying on autopilot by setting up online accounts so that bills are paid automatically. This saves time and money by reducing the number of checks written and mailed. Automate your savings by having a specific amount put into savings and retirement every month. You'll discover how little you'll miss the money that goes into these savings plans and feel good about seeing the savings build up over time. This is a great strategy for 529 college savings plans. Rather than coming up with $3,000 at the end of the year, contribute $250 per month.

4. Set up an emergency fund. Things happen – the car breaks down, the refrigerator stops working or any number of unexpected things can crop up that require immediate funds. Set a goal of having at least six to eight months of expenses saved.

5. Pay down debt. Make it a priority to pay down high-interest debt. You may be amazed at how much money you could save over the course of a year by reducing the amount of interest you pay during that time.

"No single strategy is right for everyone so look for a trusted financial adviser who will work with you to understand your entire financial situation and develop a plan to help you determine the best options for meeting your financial goals," Miroballi said. "Remember, it's hard to create a plan without understanding and establishing your goals, and it's
unlikely you'll reach your goals without proper planning. The sooner you
start, the greater your chances of success."